The billionaire chairman of Liberty Media disclosed Thursday he has slashed his 17 percent stake in B&N, acquired in 2011 for $204 million, to less than 2 percent.

The exit marks an about-face for Malone, who three years earlier had been bargaining to buy the whole company for $1 billion as he salivated over the potential of the Nook e-reader.

News of Malone’s retreat sent B&N shares tumbling 13.5 percent, to $19.12, as Wall Street fretted that the troubled Nook, which has taken a beating from Amazon’s Kindle and Apple’s iPad, may be worth even less than feared.

“The bullish argument had been that there is strong underlying value in the Nook assets,” Credit Suisse analyst Gary Balter told clients in a research note. “The decision by an insider to sell cannot be seen as anything but bad news” for such hopes, he said.

Liberty President and CEO Greg Maffei, who is relinquishing his B&N board seat, said the exit will give B&N “greater flexibility to accomplish their strategic objectives.”

Exactly what those objectives are, however, hasn’t been clear. Analysts speculated Thursday that B&N founder Len Riggio might renew his bid to take the B&N retail chain and its college bookstores private.

Some analysts likewise held out hopes that the Nook, which accounts for 7.7 percent of B&N’s business, may finally get scooped up by Microsoft, which took a 16.8 percent stake in the device in 2012.

Nook sales plummeted 50 percent in the most recent holiday quarter after B&N failed to introduce a new device for the crucial holiday season as it scrambled to slash expenses. B&N signaled Thursday it will continue to cut costs to stem the bleeding.